Over the past few years, a struggling housing market and tougher buyer conditions have made home flipping a less favorable prospect for many.
However, that appears to be no more. Instead, this concept - buying a home with the expressed purpose of repairing it quickly and selling for a profit - has been on the rise. Recent industry reports show that there is more money to be made here than in the past, but it still requires a deft touch and a little bit of skill to pull it all off.
So, if you are interested in buying a property in order to flip and sell again, you may want to be careful. A home inspection is an incredibly valuable part of the process, and it shouldn't be skipped just because your budget is time-sensitive. In fact, bringing in an expert opinion can make the difference between losing money and selling for a profit.
Average flipping profits on the rise
Recently, RealtyTrac released its Year-End and Q4 2013 Home Flipping Report, which indicated that the popularity of home flipping has been on the upswing. Based on the report, a total of 156,862 single-family homes were flipped this past year, a 16 percent increase from 2012 and a remarkable 114 percent rise from 2011.
These sales actually accounted for 4.2 percent of total U.S. single-family home sales in 2013, RealtyTrac reported, and 3.8 percent of all sales in the fourth quarter alone. Perhaps most importantly is just how much money is being made on each flip. The average gross profit for the year reached $58,081, compared to only $45,759 in 2012. In addition, these increases have come over a shorter period of time. The average days it took buyers to flip and sell has been declining, notably dropping down each year over the past several.
Daren Blomquist, vice president at RealtyTrac, explained that one reason for the gains experienced in home flipping is because of price appreciation. This means that flippers have more room for profit, even as affordable properties, such as foreclosed houses, decline.
Don't skip out on a home inspection
In order to succeed as a budding real estate investor, you should make sure to perform your research before buying any property with the goal of a quick sale. This includes a home inspection, because these licensed professionals can clarify any issues that could pop up with a property.
According to MSN Real Estate, some people pass up this opportunity when flipping, under the concept of "time is money." However, this could be a serious mistake. At risk are your finances, your safety and more knowledge about the home itself. Inspectors can shed so much light about the condition of the property that it would be foolish to skip one just because of time constraints. Items such as water damage, insects, bad wiring or furnace problems could all derail a home flip down the road, and an inspection can stop you from ever buying that home in the first place.
In addition to these benefits, a home inspection is also a vital way to reduce energy bills, the news source noted. For example, a report could turn up problems with insulation, which is cheaper to replace than new windows. And, a well-insulated home will often equal lower monthly bills. Inspectors can also figure out if there are any state, federal or local energy incentives for homeowners.
Therefore, you should make sure you know everything there is about a home before buying it. This is important for any real estate transaction, but especially so when you want to flip it again for a quick profit.